Analyzing the Relationship between BTC and NASDAQ: Short-term Divergence or Long-term Trend?

Recently, an interesting phenomenon has emerged in the market: there has been a clear divergence between Bitcoin ( BTC ) and the Nasdaq index ( NASDAQ ). While the NASDAQ continues to reach new highs, BTC is showing a downward trend, leading to a significant decline in the entire cryptocurrency market. This situation seems inconsistent with the commonly held view in the past that BTC is positively correlated with the NASDAQ. So, what is the logic behind this divergence? Has there been a similar situation in history? Let us explore the changes in correlation between the two over different time dimensions by reviewing the current and previous bull markets.

In fact, BTC and the US stock market do not always maintain a fixed coefficient positive correlation. The level of correlation between the two can vary at different stages of market cycles. By analyzing the last bull market and the current bull market, we can discover some patterns:

1. The starting and ending points of the rise for both are highly consistent in the time dimension.

2. During the upward process, the Nasdaq shows a relatively stable upward speed, presenting a nearly fixed slope straight line on the candlestick chart. In contrast, the upward process of BTC is closer to exponential growth, with a slower increase rate in the initial phase, followed by a rapid surge after a certain point in time. Interestingly, the timing of this accelerated upward "turning point" typically corresponds to the first stabilization after a pullback during the Nasdaq's upward phase.

3. The first peak of BTC often corresponds to the second pullback small platform during the upward phase of the Nasdaq.

So, which stage in history corresponds to the current position of the market? Is there a pattern to the current situation where the US stock market is rising while BTC is falling?

Observation shows that during most of the two bull markets, BTC maintained a positive correlation with the U.S. stock market. Although there have been phases of negative correlation, they are not the dominant trend. In the last bull market, after BTC peaked for the first time, the Nasdaq continued to rise while BTC began to pull back, leading to a divergence in their movements. This is very similar to the current market situation, as if history is repeating itself at the same point.

So, what will the future market trend be? How long will the divergence between BTC and the Nasdaq continue? How will the divergence recover? From the perspectives of time and intensity:

1. During the last bull market, the duration of divergence between the two was not long. From a weekly perspective, the divergence lasted for about 9 weeks before returning to a positive correlation.

2. In the previous bull market, the time point when the two regained a positive correlation usually appeared when the BTC daily chart showed a clear exhaustion of downward momentum and reached an important support level.

If we measure by historical experience, the current market does not seem to fully meet the conditions for divergence recovery, and we need to wait for more K-line information to confirm. So, how can we logically understand this special common trend that appeared in both bull markets?

Whether it's BTC, gold, or US stocks, they exist in a similar macro environment, and their prices are influenced by factors such as financial liquidity and the yield on risk-free assets. As a more resilient asset class, BTC can establish a strong surge at the beginning of a bull market, significantly outperforming US stocks. However, extremes can lead to reversals; there is no perpetual strength, as after a major rise, BTC can show weakness compared to US stocks, which mirrors the relationship between altcoins and BTC.

From another perspective, during the main upward phase, the market liquidity is sufficient to support the overall rise in asset prices. However, after rising to a certain extent, the upward momentum may weaken, making it difficult to sustain a collective rise in all asset categories, which may lead to a situation where some assets gain while others lose.

Recently, the market has also been influenced by some external factors. Regardless of how this period of trend is interpreted, after sufficient adjustment, BTC is likely to regain a positive correlation with the US stock market. As investors, we need to closely monitor market changes while maintaining a patient and rational attitude.